UNIV. OF MICH. LAW LIBRARY.

OPERATING IN SPANISH-AMERICA.

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and effects of the political domicil pertain to International law. Civil domicil refers to a certain part of the territory of the State." In the case of a National company all States require the civil domicil to be fixed and named in the constitutive instrument, and this ipso facto fixes the competence of the Courts of Justice, the fiscal responsibility of the establishment, and the law by which is determined the liability to third persons for contracts made or for wrongs suffered within the jurisdiction.

The Treaty of Montevideo.

In the year 1889 a remarkable advance towards uniformity was made by the Republics of Argentina, Chile, Paraguay, Bolivia, Peru, Brazil, and Uruguay, in signing the Treaty of Montevideo on International Commercial law, a treaty of the highest importance, which aimed at solidifying the common aspirations of those countries, as expressed thereby in the following terms:

TITLE II.-ASSOCIATIONS.

Art. 4. "The contract of Association is governed, both as to its form and the juridical relations between the members and between the association and third persons, by the law of the country in which the association has its commercial domicil.

Art. 5. "Associations which have the character of a juristic person, shall be governed by the laws of the country of their domicil. They shall ipso facto be recognised as such in the States, and qualified to exercise civil rights therein, and to promote their recognition before the tribunals.

"But for the performance of acts comprised in the object of their institution, they shall be subject to the provisions. enacted in the State in which they propose to realise them."

Art. 6. "Branches and agencies which are formed in a State by an association which is centred (rooted) in another

State, shall be deemed to be domiciled in the place in which they function, subject to the jurisdiction of the local authorities in all that concerns the operations which they effect." Art. 7. "The judges of the country in which the association has its legal domicil, are competent to have cognisance of the actions which arise between the members, or which are commenced by third persons against the association.

Nevertheless, if an association which is domiciled in one State, effects operations in another State, which give occasion to legal disputes, it can be sued before the tribunals of the latter."

Art. 35. "The judges of the commercial domicil of the insolvent are competent to have cognisance of the bankruptcy proceedings, although the person declared bankrupt casually performs acts of commerce in another Nation, or maintains therein agencies or branches which act on the account and responsibility of the principal house."

Art. 36. "If the insolvent has two or more independent commercial houses in different territories, the tribunals of their respective domicils shall be competent to have cognisance of the bankruptcy proceedings of each of the houses."

So that this Treaty speaks in two or more Articles of the commercial domicil, a term which is not generally found. in the Commercial Codes, in others it speaks of the legal domicil, then again of the separate domicil of branches and agencies, no doubt meaning thereby the civil domicil.

How companies function.

In order to ascertain the juridical position of foreign companies, it is necessary to attend to the mode in which they function, as there are at least four different modes.

First. The company remains entirely within its country. of origin, carrying on trade by means of correspondence and

casual agents: a right which is conceded by all civilised countries without any special laws or provisions, although in Art. 285 of the Commercial Code of Argentina, and in Art. 299 of that of San Salvador, the right is expressly conceded.1 I do not propose to further consider this mode.

Second mode.-By its constitutive instrument or under the authority of proper resolutions, the company fixes the administrative centre of its business in a foreign country. It is clear that this does not involve a change of nationality or of political domicil; for the association is the creature of the law of a determined State, a law which is confined to nationals and which has no power to authorise foreign associations. A society which is constituted in one country is an entity which differs in toto from one constituted under the law of another country, as regards many particulars which relate to the members inter se, and to the association as possessing rights or as subject to obligations. For example, as respects the rights of married women, of minors, of the minority of shareholders, of the powers of the directors, there exist important differences between the British law and that (e.g.) of the Republic of Argentina. The jurisprudence of the Courts of Justice differs also as regards the powers of the company itself and those of the directors towards the company.

When, therefore, the administrative centre of a company is fixed in a country different from its country of origin, neither its political domicil nor its nationality is changed; but it does adopt a new civil domicil which it did not before possess, and to that extent becomes subject to the laws thereof so far as they do not refer to status or legal capacity. I am aware that there are opinions of certain jurists to the contrary, among whom figures Professor Manuel Torres Campos in his Elements of Private International Law, p. 370,

1 See, too, the Commercial Code of Cuba, Art. 15.

where he says: "The nationality of an association is determined by the seat of the association, and the principal establishment, that is to say, the centre of operations fixes this seat, which may be different to that established by the contract of association." It is not in my view possible to separate nationality and political domicil.

By way of following out this concept in the case of a company formed in a foreign country for functioning in Argentina, the Commercial Code in some circumstances treats it as a national company. In all probability there would exist a desire to avoid the inconveniences of the Argentine law in the matter of taxation. Art. 286 says

(it is in truth an obscure article): "Associations which are constituted in a foreign country for the purpose of carrying on their principal trade in the Republic, with the greater part of their capitals raised therein, or with their central directorate and members meeting therein, shall be considered national associations for all purposes and subject to the provisions of this Code."

The following provisions of the Commercial Code of San Salvador are very similar, but wider: "Associations which propose to become constituted in a foreign country, but which must have their domicil in the Republic, and exercise their principal operations therein, shall for all purposes be deemed to be national associations and subject to all the provisions of this Code." (Art. 300.)

These Articles provide a more convenient remedy than that adopted in France for avoiding an evident grievance, as certain foreign companies which were constituted abroad for avoiding the fiscal inconveniences of the French law were held to be null and void. I refer particularly to the companies which were founded by MM. Horlaville and Rochette respectively.

It is unnecessary to say that foreign companies which are formed for the purpose of effectuating illegal operations,

whether in breach of the principles of public order or of morality or of a special law, will be treated associations in the country of their evil operations.

as void

The Third and Fourth modes.-I cannot do better than repeat the 8th Article of the Treaty of Montevideo, now adopted by so many South American States, as it embodies the principle of the secondary or civil domicil; or alternatively, the branch or agency is regarded as having a civil domicil; and further, if there is more than one branch, each branch is regarded as having a civil domicil of its own. The Article runs as follows: "Branches and agencies formed in a State by an association which is centred in another State, shall be deemed to be domiciled in the place where they function and subject to the jurisdiction of the local authorities in all that concerns the operations which they carry out."

It follows from this, that an association may have more than one civil domicil in a State, and in this case legal proceedings may be taken in any one of them, unless they concern matters which have special relation to one only of such domicils.

The Codes of many countries specially permit foreign companies to establish branches or agencies, provided that the creation of such local establishments and their local trade operations are to be subject to the local law and to the jurisdiction of the local Courts.

Certain formalities have to be observed before the branch or agent begins working; thus, in general, the company, branch or agent, has to apply for and receive the authorisation of the Executive, to be inscribed on the Register of Commerce, on proof by the Consular or Diplomatic representative of the country of origin that it has been lawfully constituted in that country, to register its contract of association and articles (alterations may also